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Bullerwell v. Volkswagen Group of America, Inc.

United States District Court, W.D. Texas, San Antonio Division

January 10, 2017




         On this date, the Court considered Plaintiffs' Motion for Remand (Docket no. 5), Plaintiffs' Motion for an Expedited Hearing (Docket no. 10), and Defendant Volkswagen Group of America's Motion to Stay (Docket no. 7). After careful consideration, the Court GRANTS the Motion to Remand, and DISMISSES the other pending motions as moot. Accordingly, this case is hereby remanded to the state court.


         Plaintiffs David and Carol Bullerwell are Texas residents who brought suit in County Court at Law No. 10, Bexar County, Texas on October 20, 2016 after allegedly purchasing a 2014 Volkswagen Jetta TDI. Docket no. 1-11 at 1, 4. Plaintiffs allegedly purchased this vehicle from Defendant GPI TX-SVII, Inc. d/b/a VW of Alamo Heights, and it was allegedly designed, manufactured, tested, marketed, and distributed by the other two defendants in this case, Volkswagen AG and Volkswagen Group of America, Inc. Id. at 4. They alleged that part of their decision to purchase this vehicle was its fuel efficiency and low emissions, which were communicated to them by Defendants' advertisements and representations. Id. Plaintiffs allege that these representations were false, and had they known so, they would not have purchased the vehicle.” Id. at 8. In particular, Plaintiffs allege that Volkswagen intentionally installed a “defeat device” in their vehicle. Id. at 5. This device, they explain, is “sophisticated software . . . whose purpose was to detect when the vehicle was being tested for emissions and turn full emissions control systems on only during that test. At all other times, the emission control systems were not fully engaged.” Id. Plaintiffs assert causes of action under Texas state law for breach of contract, violations of the Texas DTPA, fraud, and unjust enrichment.

         On November 23, Defendant VW America removed the action to this Court, asserting both diversity jurisdiction and federal question jurisdiction. Docket no. 1. VW America asserts that diversity jurisdiction exists, despite the presence of a non-diverse defendant in VW of Alamo Heights, because the non-diverse defendant has been improperly joined. Id. at 2-8. VW America asserts that federal question jurisdiction exists because this case necessarily implicates substantial questions of federal law because “Plaintiffs' claims all arise out of, and are based upon, the same allegations that Volkswagen Group of America, Inc. (“VWGoA”), violated the Clean Air Act and the regulations promulgated by the EPA. This federal question gives this court federal question jurisdiction pursuant to 28 U.S.C. §1331 and §1441(a).” Docket no. 8 at 1.

         On December 22, Plaintiffs moved to remand, asserting that there is no basis for federal jurisdiction over this case. Docket no. 5. On December 29, Defendant VW America filed a motion to stay, arguing that this Court should stay the action pending consolidation with the multi-district litigation pending in the Northern District of California. Docket no. 7. On January 5, 2017, Plaintiff filed a motion for an expedited hearing on its motion to remand, hoping to avoid the consequences of an automatic transfer of this case to the MDL forum. Docket no. 10.[1]The Court now turns to these pending motions.


         I. Plaintiffs' Motion to Remand

         Plaintiffs' motion to remand lays out two main arguments. First, Plaintiffs argue that this Court lacks subject matter jurisdiction. Next, they argue that removal is procedurally improper because not all defendants have consented to it. Because the Court finds that it lacks subject matter jurisdiction, it need not reach the issue of consent to removal.

         “[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.” 28 U.S.C. § 1441(a). On a motion to remand, the Court must consider whether removal was proper, which thus requires that a district court have original jurisdiction over the removed action.

         a. Diversity Jurisdiction

         Federal district courts have original jurisdiction over civil actions if the parties are citizens of different states and the amount in controversy exceeds $75, 000. 28 U.S.C. § 1332(a). There is no dispute regarding the amount in controversy requirement.[2] In addition, the citizenships of the parties are also undisputed-Plaintiffs are citizens of Texas, Defendant VW America is a citizen of New Jersey and Virginia, Defendant Volkswagen AG is a citizen of Germany, and Defendant VW of Alamo Heights is a citizen of Texas. Docket no. 1 at 2-3. Thus, there is not complete diversity between the parties because Plaintiffs and Defendant VW of Alamo Heights are citizens of Texas.

         Nevertheless, VW America argues that the Court should disregard the citizenship of VW of Alamo Heights for purposes of its diversity of citizenship analysis because Plaintiffs cannot even theoretically recover under state law for their claims against VW of Alamo Heights- “There is no arguably reasonable basis for predicting that state law might impose liability on the resident defendant in this lawsuit, and thus, VW of Alamo Heights was fraudulently joined.” Docket no. 1 at 7. There are two ways to establish improper joinder of the type referenced in VW America's notice of removal: (1) actual fraud in the pleading of jurisdictional facts; and (2) the inability of the plaintiff to establish a cause of action against the non-diverse party. Guillory v. PPG Indus., Inc., 434 F.3d 303, 308 (5th Cir. 2005); McDonal v. Abbott Labs., 408 F.3d 177, 183 (5th Cir. 2005). Actual fraud is not at issue in this case; therefore, the Court must determine whether Plaintiffs can establish a cause of action against the non-diverse defendant, VW of Alamo Heights.

         The burden of demonstrating improper joinder is a heavy one and is placed on the party seeking removal. McDonal, 408 F.3d at 183. To meet it, a defendant must show that there is no reasonable basis to predict that the plaintiff might be able to recover against the in-state defendant. Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc). In considering whether the plaintiff may recover, the Court need not determine whether the plaintiff will actually, or even probably, prevail on the merits, but looks only for a possibility that he may do so. Guillory, 434 F.3d at 308-09. The Court also evaluates the factual allegations in the light most favorable to the plaintiff and resolves all ambiguities in controlling state law in the plaintiff's favor. Id. at 308; see Gray ex rel. Rudd v. Beverly Enters.-Miss., Inc., ...

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